Growth Stocks
Although growth stock picks can be highly volatile, they can make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they are growing at a higher-than-average rate within their industry, or within the market as a whole, and could keep growing for years or decades.
And keep in mind that we focus on growth stocks, which have a good long-term history and favourable prospects. We downplay momentum stocks that tend to attract many investors simply because they are moving faster than the market averages, but are liable to fall sharply when their momentum fades.
There’s room for growth stock investing in your portfolio, but make sure you follow our TSI Network three-part Successful Investor strategy for your overall portfolio:
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
Make better stock picks when you read this FREE Special Report, Canadian Growth Stocks: WestJet Stock, RioCan Stock and More.
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Growth Stocks Library Archives
ATLANTIC TELE-NETWORK $33.08 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.5 million; Market cap: $512.7 million; Dividend yield: 2.8%) sells telecommunications services to rural areas and other underserved regions of the U.S., Bermuda and Caribbean. Atlantic also owns an 80% stake in Guyana Telephone and Telegraph Company (GT&T), as well as wireless interests in the Caribbean and Bermuda. In April 2010, Atlantic bought over 800,000 wireless accounts from Verizon Wireless for $200 million. These subscribers were mostly in rural parts of Georgia, Illinois, Ohio, Idaho and the Carolinas....
GOOGLE INC., $591.68, Nasdaq symbol GOOG, continues to profit as advertisers shift from publications to online ads.
In the three months ended September 30, 2011, Google’s revenue jumped 33.4%, to $9.7 billion from $7.3 billion a year earlier. If you deduct commissions that the company paid to its marketing partners, its revenue would have risen 37%, to $7.5 billion. That beat the consensus revenue estimate of $7.2 billion.
Google charges advertisers every time a user clicks on one of their ads. In the latest quarter, paid clicks rose 28%, while the average cost advertisers pay per click rose 5%.
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In the three months ended September 30, 2011, Google’s revenue jumped 33.4%, to $9.7 billion from $7.3 billion a year earlier. If you deduct commissions that the company paid to its marketing partners, its revenue would have risen 37%, to $7.5 billion. That beat the consensus revenue estimate of $7.2 billion.
Google charges advertisers every time a user clicks on one of their ads. In the latest quarter, paid clicks rose 28%, while the average cost advertisers pay per click rose 5%.
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FORTRESS PAPER, $41, symbol FTP on Toronto, is an international specialty paper producer.
In April 2010, Fortress bought an idled pulp plant in Thurso, Quebec, for $3 million. It then restarted pulp production at this plant. That has been contributing to the company’s revenue and earnings.
Meanwhile, Fortress has been converting the plant to produce a type of cellulose called dissolving pulp, which is mainly used in viscosefibre, or rayon. The conversion should be finished in early November. Dissolving pulp prices are high, and Fortress has already signed contracts with companies in China.
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In April 2010, Fortress bought an idled pulp plant in Thurso, Quebec, for $3 million. It then restarted pulp production at this plant. That has been contributing to the company’s revenue and earnings.
Meanwhile, Fortress has been converting the plant to produce a type of cellulose called dissolving pulp, which is mainly used in viscosefibre, or rayon. The conversion should be finished in early November. Dissolving pulp prices are high, and Fortress has already signed contracts with companies in China.
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EUROPEAN GOLDFIELDS, $9.65, symbol EGU on Toronto, has attracted a number of investments from Qatar Holdings LLC, a division of Qatar’s sovereign wealth fund, to develop its mines. Qatar Holdings has given European Goldfields a seven-year, $600 million U.S. loan. In addition, Qatar Holdings is buying a 9.9% stake in European Goldfields from Greek building firm Aktor Construction, and has an option to buy another 5.3%. European Goldfields will also issue 40.4 million warrants to Qatar Holdings at an exercise price of $9.08 a share. If Qatar Holdings exercises the warrants, it could increase its stake in European Goldfields to about 29%. It would also give European Goldfields an additional $366.8 million in development funding....
APPLE INC., $369.80, Nasdaq symbol AAPL, unveiled the latest version of its hugely popular iPhone smartphone this week. This new version, called the iPhone 4S, features a faster processor, a better camera and software that lets users enter commands and search the Internet by speaking instead of tapping the screen. However, investors were expecting an entirely new iPhone instead of an upgraded version of the current model. That caused the stock to fall 6% after the iPhone 4S was announced. However, it soon recovered these losses....
GENUINE PARTS CO., $50.80, New York symbol GPC, distributes auto parts to over 5,700 independent stores in North America. The company also operates about 1,000 auto parts stores under the NAPA banner. Auto parts account for roughly 50% of its sales. It gets the other 50% by distributing industrial parts, office furniture and electrical equipment.
This week, the company agreed to buy 30% of privately held Exego Group, which distributes auto parts through 430 company-owned stores in Australia and New Zealand. The deal closes on December 1, 2011.
Genuine will pay $150 million for this stake. That’s a little less than the $151.8 million, or $0.96 a share, that Genuine earned in the three months ended June 30, 2011. Genuine Parts has an option to buy the remaining 70% of Exego, provided Exego reaches certain earnings targets.
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This week, the company agreed to buy 30% of privately held Exego Group, which distributes auto parts through 430 company-owned stores in Australia and New Zealand. The deal closes on December 1, 2011.
Genuine will pay $150 million for this stake. That’s a little less than the $151.8 million, or $0.96 a share, that Genuine earned in the three months ended June 30, 2011. Genuine Parts has an option to buy the remaining 70% of Exego, provided Exego reaches certain earnings targets.
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AMAZON.COM INC., $216.23, symbol AMZN on Nasdaq, has unveiled new models of its Kindle electronic-book reader, including the Kindle Fire, the company’s first tablet computer.
The Kindle Fire features a seven-inch, full-colour touch-screen display. It is smaller and has less memory than the top-selling Apple iPad, but it will cost just $199 U.S., compared to $499 U.S. for an iPad.
The Kindle Fire connects to the Internet through Wi-Fi networks, and uses the popular Android operating system developed by Internet search provider Google (Nasdaq symbol GOOG). Amazon will start shipping the Kindle Fire to customers in the U.S. on November 15, 2011.
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The Kindle Fire features a seven-inch, full-colour touch-screen display. It is smaller and has less memory than the top-selling Apple iPad, but it will cost just $199 U.S., compared to $499 U.S. for an iPad.
The Kindle Fire connects to the Internet through Wi-Fi networks, and uses the popular Android operating system developed by Internet search provider Google (Nasdaq symbol GOOG). Amazon will start shipping the Kindle Fire to customers in the U.S. on November 15, 2011.
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UNITED TECHNOLOGIES CORP., $68.92, New York symbol UTX, is buying Goodrich Corp. (New York symbol GR). This North Carolina-based company makes a wide range of aircraft parts, including landing gear, wheels and brakes. It also maintains and repairs planes. United Technologies is paying $18.4 billion for Goodrich, including assuming $1.9 billion of the company’s debt. On June 30, 2011, United Technologies held cash of $5.4 billion, or $5.94 a share, so it will likely borrow the rest of the money it needs to buy Goodrich. Still, United Technologies can comfortably afford to take on more debt: its long-term debt of $9.5 billion is a low 15% of its $62.6-billion market cap. It also plans to raise $4.2 billion by selling shares....
ADOBE SYSTEMS INC., $24.88, symbol ADBE on Nasdaq, makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use Adobe’s software to create print publications and web pages. The company also makes Adobe Flash, which lets web site developers make web pages more interactive by adding animation and video. In its third quarter, which ended September 2, 2011, Adobe’s earnings fell 15.2% to $195.1 million, or $0.39 a share. A year earlier, it earned $230.1 million, or $0.44 a share. Without one-time items, earnings per share would have risen 1.9%, to $0.55 from $0.54. That beat the consensus estimate of $0.54 a share. Revenue rose 2.3%, to $1.01 billion from $990.3 million. That missed the consensus revenue estimate of $1.03 billion....
We still think investors will profit most — and with the least risk — by buying shares of well-established, dividend-paying stocks with strong business prospects. These are companies that have strong positions in healthy industries. They also have strong management that will make the right moves to remain competitive in a changing marketplace. Stocks like these give investors an additional measure of safety in today’s volatile markets. And the best ones offer an attractive combination of low p/e’s (the ratio of a stock’s price to its per-share earnings), steady or rising dividend yields (annual dividend divided by the share price) and promising growth prospects....